In 2019 Firestorm committed to the practice of releasing key financial information each year.
Although our co-operative has always utilized open-book and collective management, the release of financial information to the larger public gives community supporters better insight into how Firestorm operates and how we use community resources. We also hope that being able to "peek under the hood" will allow those exploring the creation of their own co-operative business an opportunity to better understand how a real world co-op survives and (hopefully) thrives.
What to Expect
Below you will find a chronology of financial statements. Each year will begin with a summary in narrative form to highlight what we feel were important developments during the period, followed by four documents: Income Tax Returns, Profit & Loss Statement, Balance Sheet, and Statement of Cash Flows. For years that predate this practice, starting with 2010, we will post only tax returns.
Where they occur, we will redact last names, SSNs, street addresses, and other PII of staff.
Summary text coming soon...
We started the new year off determined to pay down our debts and further increase compensation for labor. As our 2015 loan from Shared Capital Coop approached the end of its term, we identified a community member willing to lend us $15k to cover the balance. No interest on the new loan meant we could be debt free by early 2022. But in mid-March as the COVID-19 pandemic reached our community, we felt it was necessary to close. We would remain so for the rest of the year. This generated enormous uncertainty about Firestorm's future, but we used what capacity we had to explore new ways of operating and connecting with community.
Thankfully, we received incredible support from both neighbors and friends across North America who were concerned about our survival. Firestorm's sustainers program saw an organic surge in membership over the first three months of the pandemic. At the urging of the US Federation of Worker Cooperatives, we applied for, and received, PPP and EIDL. We also benefited from increased online sales after social media posts about a break-in at Firestorm went viral in May. These circumstances meant that our co-op had the financial buffer needed to both weather closure and develop a new vision for itself.
The pivot to online sales—which had generated less than 1.5% of our revenue in 2019—was particularly successful. We experimented with free local delivery, contactless pickup, and $1 shipping, allowing us to maintain our 2019 sales volume even while closed. Although we had reduced staff hours in March, the success of e-commerce allowed us to eventually return our staff to full-time at an improved rate of $24,570/year.
Having successfully expanded bookstore operations in the previous year, this was a year of considerable growth. Our book sales reached $245k and we continued to build engagement with our sustainers program. Growth was driven by increased revenue in-store as well as new or expanded community vending opportunities. We continued our successful partnerships with local schools and drove as far as Durham, NC to vend at numerous conferences.
Having met our revenue goals in the first half of the year, we made the decision to increase staff compensation by about 38%, moving from $13,195/year to $18,200/year. (Our pay scale remained flat, with no consideration of role or "seniority.") This contributed to the resolution of an elevated staff turnover rate, allowing us to build stronger relationships and invest in staff knowledge and skill.
Overall this was a year marked by a decrease in the turbulence our co-operative had experienced in prior years and it felt as though we began to hit our stride, even if we remained short of our ultimate goals.
In July of 2015, after sixteen months with no storefront, our co-operative opened on Haywood Road in West Asheville. We had made substantial changes to our business model, including a shift towards book sales supported by a 200% increase in inventory and twice the sales floor. Other features of the new vision included salaried full-time staff, an office space subleased to two nonprofit partners, and collaborations with local schools. To fund the buildout and provision of the new location our co-op acquired $44k in new loan money from Shared Capital Coop and Mountain BizWorks.
Unfortunately, our financial projections proved to be overly optimistic and we finished our first full year on Haywood Road with substantial losses and little financial buffer despite deep cuts to owner compensation. Our loans were restructured and we continued making interest only payments through the Winter of 2016/2017. The viability of the project was an open question throughout this period.
In the face of this uncertainty we launched a sustainers program to support the community work of our co-operative. Along with moderate sales growth, these community funds bought us time to reexamine what wasn't working and plan further transitions in our business model. At the start of 2018, market research and difficulties retaining skilled food service staff led us to discontinue cafe service and further expand our bookstore. We liquidated cafe fixtures and used the proceeds to increase bookstore inventory by 40%. As a result of the effort, book sales exceeded $200k/year for the first time, having grown by about 16%. We additionally took aggressive steps to pay down our commercial loan, including $5k in extra principal payments.
From 2010 to 2014, our co-operative (doing business as "Firestorm Cafe & Books") existed in Downtown Asheville, primarily as a cafe. We had opened our doors just months before the financial crisis of 2008 and struggled to survive the resulting recession. During this time we operated with a part-time staff who were paid on a stipend basis. This was a reflection of our extremely scrappy financial position, having launched the co-operative with little more than $30k (approximately equal parts owner investment, community loan, and commercial debt).
Capitalization was a major obstacle to our business at this time and we were carrying more than $10k in credit card debt that had been "re-priced" to 27% interest in the lead up to the collapse of the issuing bank. As a result, our co-op lacked many of the resources it needed to grow beyond a break-even point.
In 2013, following several attempts to retool operations, our co-op engaged Mountain Bizworks as a client. The result of our work with a consultant was a realization that our business model was fundamentally broken. We closed our doors in the Spring of 2014 and began developing a new vision for the co-op.